MEMORANDUM FAC2601 MAY

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1 MEMOANDUM FAC2601 MAY

2 FAC2601/201/3 SOLUTION 1 Equalisation of operating lease payments: (3 000 x 12) + [(3 000 x 115%) x 12] + (1 200 x 12) ) ) 36 = per month Annual prepayment 1 March 2009 to 28 February 2010: For 12 months (2 550 x 12) Actually paid (3 000 x 12) Prepayment per annum Annual prepayment 1 March 2010 to 28 February 2011: For 12 months (2 550 x 12) Actually paid (3 450 x 12) Shortfall 1 March 2011 to 28 February 2012: For 12 months (2 550 x 12) Actually paid (1 200 x 12) Journal entries Year ended 28 February 2010 Operating lease expense (SCI) Prepayment (SFP) Bank Year ended 28 February 2011 Operating lease expense (SCI) Prepayment (SFP) Bank Year ended 28 February 2012 Operating lease expense (SCI) Bank Prepayment (SFP) Dr Cr 61

3 SOLUTION 2 JAMESON (PTY) LTD STATEMENT OF FINANCIAL POSITION AS AT 28 FEBUAY 2010 Notes ASSETS Non-current assets... Property plant & equipment... Other financial assets Current assets Inventory Trade and other receivables Total Assets... EQUITY AND LIABILITIES Total equity... Share capital... etained earnings... Other components of equity ( ) Non-current liabilities Financial lease obligation Current liabilities Bank overdraft Accrued portion of operating lease payment Current portion of long term loan Dividends payable Total equity and liabilities

4 FAC2601/201/3 JAMESON (PTY) LTD NOTES ON 28 FEBUAY POPETY, PLANT & EQUIPMENT Furniture and fittings Machinery Factory buildings Land Total Carrying amount 01/03/ Cost price Accumulative depreciation ( ) 0 ( ) 0 ( ) Movements Additions Depreciation (75 000) (21 000) ( ) 0 ( ) evaluation Carrying amount 28/02/ Cost/Valuation Accumulative depreciation ( ) (21 000) 0 0 ( ) Factory buildings are situated on erf 235, Midrand. The factory building were revalued by a sworn appraser, Mr J Wrong on 28 February 2010 according to the net replacement value. 2. Finance lease obligation - long term borrowing Total liability under finance lease Less : Current portion payable within 1 year ( )... (34 842) Long term portion of finance lease liability The above liability is secured by finance lease agreements in respect of machinery. The effective interest rate is 12% per year. The full loan is repayable in 6 bi-annual installments of each. econciliation between the total minimum lease payments and their present value: At 28 February 2010 Future minimum lease payments Not later than 1 year Later than 1 year but not later than Less finance cost ( (11 422) Present value Not later than 1 year ( ) Later than 1 year but not later than 5 ( )

5 Calculations: 1. Operating lease Office buildings Payments year 1 2: x 24 (12 x 2) Payments year 3 6: x 48 (12 x 4) Equalise payments: ) Payments made: x Accrued ent Factory Building: Depreciation for the year: ) Cost Accumulative depreciation ( ) Carrying amount at year end Gross replacement value at year end evaluation: Funiture and fittings: Carrying amount at year end Carrying amount at beginning of the year: x 100 ) Depreciation for the year: Cost price: x 100 ) Inventory Calculate NV at year end: 64 aw cost NV: x 95% Finished goods@cost NV: x 95%

6 FAC2601/201/3 Inventory at year end: aw material Work in progress Finished goods Total Trade and other receivables: Carrying amount at year end Less Provision for credit losses (35 500) Dividends declared: shares x 0.05 = Investments: Cost Transaction cost Cost price Fair value adjustment Fairvalue at year end ( ) Depreciation on Machinery ) 5 = etained earnings Opening balance Profit for the year Dividend declared...(900) Closing balance

7 SOLUTION 3 a) POLO BEPEK STATEMENT OF COMPEHENSIVE INCOME FO THE YEA ENDED 30 JUNE 2010 No tes Income ( x 100 ) 114) Cost of sales (65% x ) ( ) Gross profit (35% x ) Other income ( ) Other expenses ( ).. ( ) Administrative expenses ( ) Finance costs ( ) (14 925) Profit before tax Income tax expense (4 800) Profit for the year Other comprehensive income Profit on not-held-for-trading investments evaluation surplus Total comprehensive income POLO LIMITED NOTES FOT THE YEA ENDED 30 JUNE Profit before tax Profit before tax is disclosed after taking the following discloseable items into account, among others: Income: Continuing operations turnover Income from subsidiary (Prada Ltd) - Interest received ( x 10 ) 12 x 15%) Income from other financial assets: - Listed investments dividends received ( x 0.1) + (4 700) Fair value adjustment on investments through profit or loss

8 FAC2601/201/3 Expenses: Loss on the sale of non-current asset Directors remuneration: Non-executive directors: emuneration ( ) Executive directors: emuneration ( ) Pension Less paid by the subsidiary ( )... ( ) Total paid by company Auditors remuneration Audit fees Expenses Depreciation ( ) Calculations: 1. Buildings 1.1 Additions Direct cost given ( ) Depreciation capitalised Depreciation current year ( ) 25 x 3 ) 12) Plant and machinery 2.1 Cost opening balance ( ) O ( ) 2.2 Depreciation current year ( x 20%) Depreciation capitalised ( x 9 ) 12) Accumulated depreciation closing balance ( ) Depreciation for the year (expense):

9 3. Furniture and equipment 3.1 Depreciation on machinery traded in current year ( x 10% x 9 ) 12) Accumulated depreciation on machinery traded in ( ) Carrying amount of machinery traded in ( ) Depreciation of equipment on hand current year ([( ) ] x 10%) + ( x 10 % x 3 ) 12) 3.5 Total depreciation current year ( ) Cost closing balance ( ) Accumulated depreciation closing balance ( ) Interest on long term loan (Levi Ltd): Loan at end of year Number Total payments payable 8 Payments already made: 30/11/ /11/ /11/ Payments left on 30/06/ Outstanding balance on 30/06/ ( ) 5 = per payment) Loan end of year Plus 1 payment made during the year Loan beginning of the year Outstanding balance: 01/07/ /11/ /12/ /06/ Finance costs: x 5 ) 12 x 11% x 7 ) 12 x 11% Total Interest received from Prada Ltd on loan 68 Period: 01/09/ /07/2010 ( x 15 % x 10 ) 12)

10 FAC2601/201/3 6. Profit on not-held-for-trading financial assets: Beginning of the year: , End of year: , Profit in other comprehensive income Fair value adjustment on investments through profit or loss Cost at beginning of year Fair value at year end ( shares x 5.50) Fair value adjustment Directors remunerations: Polo (Parent) Executive Prada (Subsidiary) Polo (Parent) Non-executive Prada (Subsidiary) emuneration Mr A: - emuneration Meetings Mr C : - emuneration Meetings Pension: - Mrs H :

11 SOLUTION 4 MALEMONE LIMITED STATEMENT OF CHANGES IN EQUITY FO THE YEA ENDED 31 MACH 2012 Share capital Share capital Cumulative ordinary preference shares shares etained earnings evaluation Capital reserve redemption Property, plant reserve fund & equipment Mark to market reserve Balance at 1 April Total comprehensive income for the year: Profit for the year Other comprehensive income Issue of shares - Ordinary shares Preference shares Capitalisation ( ) ( ) - Dividends - Preference shares ( ) ( ) - Ordinary shares (57 000) (57 000) Share issue expenses (1 000) (1 000) Total Calculations 1. Issued shares Ordinary shares issued ( shares x 5 cents) Capitalisation of shares Ordinary shares capitalised [( ) shares ) 5 x 7.5 cents] evaluation of office buildings evaluation surplus [( x 0.8) - ( x 0.8)] O [ ( x 10% x 2)] [ ( x 10% x 2)] 4. Fair value adjustment Fair value adjustment of investment ( x (7 6)

12 FAC2601/201/3 5. Dividends Preference dividends Previous year: ( x 10%) Current year: ( x 10%) ( x 10% x 8 ) 12) Ordinary dividends [( ] x 12 cents Cumulative preference shares issued: x 8.5 = FAC2601_2013_TL_201_3_E.doc 71

LUCIANO SCHOOL OF LAW & SOCIAL SCIENCES [LSLSS]

FAC2601/ep/ag EXAMPACK FINANCIAL ACCOUNTING FO COMPANIES: FAC2601 LUCIANO SCHOOL OF LAW & SOCIAL SCIENCES [LSLSS] 2015 Authored by: levision kamanga 1 Contents OCTOBE / NOVEMBE 2013... 2 OCTOBE / NOVEMBE